The idea that expatriates (expats) may one day be able to own property in Indonesia has been tossed around for years. But, as is usually the way, nothing has become of those ideas until now. However, it would seem that there is still some ways to go before the ideas become reality. Yet, it is interesting to see that the State Department of Public Housing is making rumblings to the effect that there are moves afoot to loosen the prohibitions on expats owning Indonesian property.
The current state of affairs permits expats to take 25-year extendable (once) leases on property. There are other ways that expats go about "owning" a property in Indonesia. The most common of these is a nominee structure that involves the property being purchased by an Indonesian and then used as collateral in a loan agreement with the expat. This type of structure is one that is frequently used in Bali.
The current discussion appears to suggest that cities and special economic zones are the most likely areas to see the prohibitions eased. Nevertheless, the talk also suggests that the ownership of property in city areas is likely to be restricted to apartments. This in essence would mean that there is still likely going to be high demand for the nominee structure to remain if expats are more interested in a house as opposed to an apartment.
Yet, this is definitely a move in the right direction.
I guess time will tell whether there will be a full liberalization of the real estate sector that would allow foreigners to own property, and as much of it as they can afford. Maybe if the rules do change I might even be tempted to get into the market myself.
15 comments:
Wait till they fix the electricity problem. And the water problem. Waste disposal also needs to be considered. Prices in Bali have become absurdly high recently and there are certainly a lot of speculators in the real estate sector. Infrastructure has not really kept up so you may have to generate your own electricity, drink your own water and burn your own trash in your luxury villa cause the government is taking their sweet time providing these services. I don't know when the boom will end but sooner or later it will and that will hopefully be the time to buy.
Already bought, Rob, and I've got my name, under 'Er Indoors, on the title deed.
But then we did buy from the then chief of police.
PJ...
Indeed they have...the site I pulled this happy snappy from is advertising this villa for USD 1.4 million :D
J...
Interesting! I won't bore you with the legal stuff. Then again, I might have to check it all over again in light of your comment as I was fairly certain that the best us expats could do was a name on a long-term lease.
But, that said, you have been there a few years now, and by your own accounts over at Jakartass there is little likelihood of you pulling up stumps and moving somewhere else anytime soon. So, investing in a family home seems like a good thing to have done.
I know of documents that state things that I believe are not legally possible. Several expats I know have proudly shown me their deeds with their names printed on them - they pay the taxes etc .... I can only warn them.
By the way, are there any significant restrictions on foreigner's buying houses and land in Oz?? Must it be a new house??
Anong...
I know of a few foreigners that have title deeds to property as well. But, that just seemed to fit the profile of anything is possible in Indonesia.
As I said, I always believed that the law restricted foreign "ownership' of property in Indonesia either to a long term lease deal or through a nominee structure.
On the Australian front. I would have to check the laws again in order to quote specific articles and the like, but my understanding is that they can.
I know a few people who are not Australian citizens but say they own property. To be honest, I have never seen the need to ask them to show me the title deeds to confirm this though :D
YOu might have seen the Globe comments on this. One of the commentators touched on a point Id like to make.
Expats would push up the price of appartments etc and drive Indonesians out of the market to a certain extent. Real estate agents would have a field day; and there would probably be a flurry of further building leading to a minor property bubble...or if not, higher rents....
Anong...
Maybe. But, the assumption would be that expatriates would be flooding the market to buy property. This might be true in some specific locations, but it is unlikely to repeat across the board.
Generally, expatriate contracts include housing, either as an allowance or housing is provided, so there is little need to invest in property in that sense. the most likely investors / buyers will be long term expats.
As to higher rents. Well, there would be plenty of expats who would tell you a story or two about how they get their Indonesian colleagues to do the rental negotiations because real estate agents already have the dollar signs rolling around in their eyes as soon as they see an expatriate.
I have heard of rental prices being jacked up by 25% to 50% just because the house was to be rented by an expat (over what it would have been rented to an Indonesian).
So, perhaps rents will go up, but then again they already go up now when expats are in the game.
But any expats buying into the market are unlikely to be pricing out middle and lower income Indonesians from the market.
Yeh you are probably right on the whole. Its a funny market. You have rich expats paying 4500USD for a largish appartment with some luxury and other expats like me staying comfortably in a small inner city appartment that would sell for 70 000 AUD max and would rent at about 600 AUD a month. Compare that to Sydney. Its the cheaper market that i think expats would snaffle up - even if only to stay in a few months a year for a holiday base (rent the rest of the year) and hoping for a capital gain in the longer term.. Sort of a speculative purchase in the main....
Dont know really
Anong...
I would not know about apartment living :D
I was on a local contract that did not include housing or a housing allowance. So, my housing costs came out of my salary. We lived in the burbs (so to speak - Bekasi).
I certainly was not going to be any threat to even the Indonesian middle class with respect to property investment...
From Globe today..
The government should revise rules to allow foreign nationals to buy apartments and houses in Indonesia before an international real estate forum in Bali in May, the head of a real estate association said on Monday.
Teguh Satria, chairman of the Indonesian Real Estate Developers Association (REI), told the Jakarta Globe that he hoped the regulation prohibiting foreigners from owning property would be revised sooner than May or June — the time frame suggested by the housing minister last week.
“The REI has chosen Nusa Dua, Bali, as the host for its 61st World Congress from May 24 to May 28. It would be good to revise the regulation by then so Indonesia could not only act as the host, but could open its doors to the participants interested in purchasing property here,” Teguh said.
“Currently there are many Indonesians who own property abroad. It’s about time we open our doors [to foreign nationals],” he added.
this makes it clear who is behind this; but tell me their rationale; how will INdonesia gain??
good post....thanks..
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